Trustees play a critical role in the administration of trusts, holding a fiduciary responsibility to act in the best interests of the beneficiaries. In Malaysia, the duties and responsibilities of trustees are governed by the Trustee Act 1949 (Revised 1978) and are essential for ensuring the trust is managed properly and according to the settlor’s intentions. Here are the key duties and responsibilities of trustees in Malaysia:
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Duty to Act Prudently
Trustees are required to manage the trust assets with the same care, skill, and diligence that a prudent person would exercise in managing their affairs. This includes making informed and well-considered investment decisions, seeking professional advice when necessary, and avoiding unnecessary risks.
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Duty to Act in Good Faith
A trustee must always act in good faith and in the best interests of the beneficiaries. This means putting the beneficiaries’ interests above their own and avoiding conflicts of interest.
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Duty to Follow the Trust Deed
Trustees must adhere strictly to the terms and conditions set out in the trust deed. This legal document outlines how the trust is to be managed, including how assets should be invested, managed, and distributed to beneficiaries.
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Duty of Loyalty
Trustees must act solely in the interest of the beneficiaries and avoid any actions that could benefit themselves at the expense of the trust. This includes disclosing any potential conflicts of interest and refraining from self-dealing.
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Duty to Account and Report
Trustees are required to keep accurate records of all transactions and provide regular reports to the beneficiaries. This ensures transparency and accountability in the management of the trust assets.
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Duty to Impartiality
Trustees must treat all beneficiaries fairly and impartially, taking into account their respective interests and needs. They must not favour one beneficiary over another unless the trust deed explicitly allows for such discretion.
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Duty to Preserve Trust Property
Trustees have a responsibility to protect and preserve the trust property. This involves safeguarding assets against loss or damage, maintaining insurance where appropriate, and taking legal action if necessary to defend the trust’s interests.
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Duty to Act Personally
While trustees can delegate certain administrative tasks, they cannot delegate their core fiduciary responsibilities. They must make critical decisions and ensure that any delegation is managed responsibly.
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Duty to Seek Professional Advice
In situations requiring specialized knowledge, trustees must seek professional advice. This could involve consulting with financial advisors, lawyers, or other experts to ensure the trust is managed according to best practices and legal requirements.
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Legal Recourse for Breach of Duty
Beneficiaries have the right to take legal action if they believe a trustee has breached their duties. This can result in the trustee being held personally liable for any losses incurred by the trust due to their misconduct or negligence.
Conclusion
The role of a trustee in Malaysia is both demanding and crucial for the effective administration of a trust. By understanding and adhering to their duties and responsibilities, trustees can ensure that they manage the trust assets prudently and in the best interests of the beneficiaries. Proper conduct, transparency, and adherence to legal standards are essential to fulfilling the fiduciary duties of a trustee.
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